AMD reports first quarter loss on GlobalFoundries charge

Advanced Micro Devices reported a first-quarter net loss Thursday as costs related to GlobalFoundries and its SeaMicro acquisition weighed on its earnings.

Agam Shah
April 19, 2012

IDG News Service

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Advanced Micro Devices reported a first-quarter net loss Thursday as costs related to GlobalFoundries and its SeaMicro acquisition weighed on its earnings.

For the quarter ended March 31, AMD reported a net loss of US$590 million, a sharp drop from the $510 million profit it reported in the same quarter last year.

AMD had a charge of $703 million payable to GlobalFoundries, the manufacturing division it spun off, due to an amendment to a chip-supply agreement between the companies.

The new agreement allows AMD to work with other companies to source chips made with an advanced, 28-nanometer manufacturing process. But AMD will continue to work with GlobalFoundries on 32-nanometer parts.

AMD announced during the quarter that it would buy low-power server vendor SeaMicro for $334 million, to expand its presence in the burgeoning microserver business. The cash impact of the purchase was $281 million, AMD CFO Thomas Seifert said in a statement.

Excluding one-time items, AMD reported income of $92 million, or $0.12 per share. That was ahead of the estimate of $0.09 per share by financial analysts polled by Thomson Reuters.

Revenue was $1.59 billion, down from $1.61 billion in the first quarter of 2011.

AMD saw success during the quarter in the $400 to $700 mainstream laptop segment and also saw its chip supplies return to normal, said Rory Read, AMD's CEO, in a commentary. Chip sales had suffered because of a shortage in hard drives, which pulled down PC shipments.

AMD is poised for growth with new chips in the pipeline, Read said.

AMD is expected to launch new consumer PC chips this quarter code-named Trinity, which will take on Intel's upcoming Core processors code-named Ivy Bridge. AMD says it will push low-power variants of Trinity into lightweight laptops that it hopes will be cheaper than Intel-based ultrabooks.

AMD will also ship new low-power chips this quarter for netbooks, which should improve chip sales, Read said.

AMD has been restructuring its operations since appointing Read as its new CEO last August. Read has overhauled management and focused the company more on the server market while redefining its chip development strategy. The SeaMicro acquisition was a big step in its server strategy.

In February, AMD said it would start to integrate other companies' intellectual property in its processors, so it can offer purpose-built chips to customers. It said it would not rule out combining ARM-based designs with its x86 CPU and graphics chips.